Beginning in 2020, Rents May Triple for up to 100,000 Families

10 April 2018

Older property rental contracts, which are still in the midst of a transitional period, are a focus of serious concern for the Lisbon Tenants’ Association. Owners guarantee that a large majority of these tenants are protected by law.

A request for a meeting arrived by e-mail one year before the end of the rental contract. However, the early warning wasn’t enough to make up for the additional burden that the tenant, Luís, will be required to shoulder. He has been paying a monthly rent of 632 euros for a one-bedroom flat in the centre of Lisbon since 2014.  No longer, the updated rent will cost him 800 euros. “I used that year to look for a new place to rent and even considered buying a house. After seeing dozens of properties and making many offers, I was unable to buy and had to accept the new rent,” Luís told DN/Dinheiro Vivo.

Luís’ case is far from being unique. There are some tenants who are faced with exponential increases in their rents, especially in large urban areas. According to Romão Lavadinho, president of the Lisbon Tenants’ Association, rents can double or even triple in value once the corresponding contracts expire.

There are cases where people who had rents of 200 to 300 euros are having to pay 600 to 700 euros,” the executive told DN/Dinheiro Vivo, noting that “in the city centre, there are some cases where rents aren’t just doubling, they are tripling,” largely due to the real estate boom and increasing pressure from tourism.

The proportions may escalate in the next two years, when the New Urban Rental Law’s (NRAU)  transitional period comes to an end. Initially, a brake on a possible rise in rents was in force for five years, from 2012 to 2017. Last year, a deferment for another three years was granted, to 2020 (2022 for renters aged over 65 and people with disabilities). “But after the transitional period, rents will be recalculated, reaching 1/15th of the property’s value. Rents that cost 120 euros today can go up to 500 or 600 euros,” Mr Lavadinho stated.

It is a simple calculation: a property with a taxable asset value (VPT) of 100,000 euros can charge a maximum of 6,700 euros per year in rent. The monthly payment on such a property would add up to close to 560 euros, he noted.

How many tenants could be affected? “Currently, a little over one hundred thousand,” Mr Lavadinho said, noting that “most of these people are elderly.”

António Frias Marques, of the National Homeowners’ Association, recognises that rents may increase at the end of the transitional period, but also stressed that “most of these tenants are over 65 and have low incomes [less than five times the gross minimum wage], and they are protected by the law.”

However, no accurate figures exist on the number of people who may be subject to an increase – in 2012 the amount was put at 250,000. There are also no data on evictions and the non-renewal of contracts. Regardless, Mr Lavadinho said that “the situation is serious at a national level because, as the contracts come to an end, owners will either increase rents or rescind the contracts.”

The Lisbon City Council is paying close attention to the situation, which has worsened with the growth of short-term local tourist accommodations in several parishes of the historic centre. That is why the municipality intends to create a mechanism to help tenants faced with possible evictions or other problems with housing by the beginning of May.

An official source at the housing council told DN/Dinheiro Vivo that a systematic survey of the city’s housing problems is underway, extending previous informal studies based on data collected by parish councils and residents’ associations.

Original Story: Diário de Notícias – Ana Margarida Pinheiro

Photo: Pedro Rocha / Global Imagens

Translation: Richard Turner